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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All Right Reserved

The Legal & Regulatory

Environment of Business 16e

Chapter 11

Intellectual Property in the Property System

Reed Pagnattaro Cahoy Shedd Moorhead

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QUIZpop

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QUIZIntellectual property includes which of the

following:

a. trademarks and trade secrets

b. patents

c. copyrights

d. all of the above

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To recognize why intellectual property is so

important to our economic system and to explain

how it creates incentives for investment.

To identify the various types of information that is

protected by trade secret law and characterize the

circumstances that constitute misappropriation.

To list the requirements for a valid patent and

recognize important issues in he enforcement of

patents.

Learning Objectives

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To categorize source indicators as trademark

types and to differentiate between trademark

dilution and infringement.

To define copyright protection and fair use

limitations.

To describe the basic elements of the

international system for protecting

intellectual property rights.

Learning Objectives

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Intellectual property

includes the application

of property in the areas

of trade secrets, patents,

trademarks, and

copyrights.

Introduction

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Justification

More productivity of new resources

Individuals work harder to benefit

selves, families and communities

U.S. Constitution – to promote

science and arts

Faster R&D

Benefits of competitive advantage

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Business Assets

Tangible

(Physical)

• Land

• Equipment

Intangible

(Not Physical)

• Knowledge – based

resources

• E.G. employee skills

& talents, inventions,

business methods

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Trade Secrets

Knowledge

Or Info

Kept Secret(reasonable

measures

taken)

Economic

Value

Uniform Trade Secrets Act11-9

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Keeping the Secret

To protect trade secret, business must

take reasonable measures to keep

knowledge secret

Steps

• Audit (identify knowledge resources)

• Preserve secrecy

• Locking formulas

• Protective firewalls

• Regulate visitor access 11-10

Regarding Employees

Businesses must take

reasonable measures to

protect trade secrets from

employees

Confidentiality (non-compete)

agreements

• Must be for a valid business

purpose11-11

Civil & Criminal Enforcement

Injunction to prevent use

or divulging of secret

Delay in taking job

Damages

Economic espionage act

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Legal

monopoly In

Resource of

copying &

marketing

New

invention

Patents

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Food for thought…

Thomas Jefferson helped to draft the first federal

patent law and also invented numerous

new devices himself,

-BUT-

Abraham Lincoln was the first American

president to actually patent an invention.

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Patent –

exclusive right

to invention

1. File application

2. Filing fee

3. Explain invention

4.Show difference from prior art

5. Describe patentable aspects

Obtaining a Patent

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Patentable Subject Matter

Subject Matter

•Processes

•Machines

•Compositions of

matter

•Improvements

•Certain plants

Characteristics

•Nonobviousness

•Novelty

•Usefulness

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“Processes” as Patentable

Subject Matter

Mere ideas are not patentable.

Business methods historically

unpatentable.

Algorithms – only if tied to

machine or transformation of

physical object.

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Characteristics of Patentability

Nonobviousness – ability to produce

surprising or unexpected results.

Novelty – new and different

Usefulness – utility – the ability to do

something.

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Duration & Enforcement

Utility patents – 20 years

Plant patents – 17 years

Design patents – 14 years

Patent owner can sue against

infringement for injunction,

damages, or destruction of

infringing item.11-19

Current Patent Issues

Patent Trolls

Pharmaceutical

patents

Human genes

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Marks on what is

produced to represent

the origin of goods &

services

Recognizability or

distinctiveness

Protection against

confusion

Trademarks

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Food for thought…

Imagine that you were blindfolded and taken into

a national fast food /restaurant franchise or a

national chain department store. When you took

the blindfold off, would you likely know the name

of the department store chain or national fast

food /restaurant franchise?

That is the power and importance of trade dress.

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Types of Trademarks

•Protection under Lanham Act Of 1946

•Trademark

•Service mark

•Certification mark

•Collective mark

•Trade dress

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Food for thought…

If we lined up pairs of Adidas, Nike, Reebok,

Pumas, New Balance and Converse

sneakers, could you identify most of them

from 20’ away?

That is the power and importance of

trademarks.

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Registration

Must be used in interstate commerce

Must be distinctive•Not same or similar to other mark

•Not merely descriptive (context)

•Not generic (context)

•Not prohibited or reserved

name or signs

Notice (official gazette)

Renewable every 10 years

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A public meaning that is

different from its meaning

as a person’s name or a

descriptive term.

Secondary Meaning

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Enforcement

Criminal Violation – for

intentionally counterfeit

products

Civil Violation –

InfringementRemedies – damages,

injunction, destruction of

infringing products

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Dilution

Federal Trademark Dilution Act

May not use mark same as or

similar to a “famous”

trademark

Dilution significance

Do not have to show public

confusion

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Copyright

Monopoly

Copying Limited

TimeMarketing

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Copyright Law

Property In creative expressions

Criteria

•Original work

•Fixed in a tangible medium of expression

•Must show creativity

Authors, not inventors

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Protection & Fair Use

Protection attaches at creation

(common law)

Fed protection requires filing

Copyright symbol

Fair use – not infringement•Purpose & character of use

•Nature of work

•Amount & substantiality

•Effect on potential market

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Digital Age Issues

File sharing

Digital Millennium Copyright Act

• Makes illegal efforts to get around

protective devices

•Restricts certain recorders &

camcorders

•Internet service providers

exemptions11-32

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QUIZA copyright gives the owner the _____

right to reproduce, distribute, perform,

display, or license his work.

a. Exclusive

b. Shared

c. Human

d. Limited11-33

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think

TANKthink

TANKthink

TANKWhich is not an allowable “fair use” of

copyrighted material?

a. Teaching

b. Research

c. Profits

d. Reporting

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International Intellectual Property

Rights

There are no fully international intellectual

property rights.

The Trade Related Aspects of Intellectual

Property Agreement (TRIPS) creates some

international standards.Member countries agree to provide intellectual

property rights regarding all forms of IP as discussed

in this chapter.

Enforcement is uneven from country to country.

Other treaties exist but are also not

enforced in a standard manner.

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Food for thought…

The bottom line is that if you are engaging in

international business, be careful to protect

all aspects of your intellectual property.

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